In another blow to restrictions on political giving by business and labor interests, Colorado’s top court Monday rejected a voter-approved measure to bar holders of large, no-bid government contracts from making campaign contributions.

The 4-1 decision comes weeks after the U.S. Supreme Court turned federal campaign-finance law on its head by allowing corporations and labor unions unlimited spending in candidate elections for the first time in 63 years. Colorado officials continue to grapple with how the new federal rules fit with local campaign-finance laws.

The state’s high court found Colorado’s Amendment 54 vague, overbroad and “so incomplete or riddled with omissions that it cannot be salvag(ed),” according to the decision.

Justices also said the amendment threatened the constitutional free-speech rights of the myriad people covered by the ban and disagreed with provisions that counted labor unions as sole-source contractors.

The decision, affirming a lower court ruling, puts at ease directors and significant shareholders of businesses and nonprofits with government contracts as well as their relatives, who were also barred from giving under the amendment.

And labor unions again will be able to readily give hundreds of thousands of dollars to state and local candidates through small donor committees ahead of November.

“The decision came down in enough time that it won’t create any kind of cloud or ambiguity over the 2010 election,” said Doug Friednash, a lawyer for one group of plaintiffs. “Boards and nonprofits won’t have to choose between civic service and being able to make political contributions.”

Supporters touted the amendment, which 51 percent of voters approved in 2008, as a way to end the appearance of undue influence in state and local government.

Tom Lucero, former head of the amendment campaign and current congressional candidate, called the decision “very disappointing.”

“Back (in 2008), everybody was talking about the need for transparency and trying to get pay-to-play out of politics,” said Lucero. “We thought Amendment 54 would have been a perfect solution.”

Uphill battle from start?

He and other public faces of the initiative either could not say or declined to say where the language for the amendment came from. Lucero said it was drafted before he came aboard.

The state lawyers defending the amendment in court said the voter initiative faced an uphill battle from the start.

“When we took up this case, we knew it was going to be a tough case to make. Clearly, Amendment 54 had some constitutional issues from the get-go,” said Attorney General’s Office spokesman Mike Saccone. “The Supreme Court decision today was not unanticipated.”

$100,000 in legal costs

Defending the provisions cost the office 16 months of legal work and at least $100,000. The price tag could rise if plaintiffs seek attorney’s fees.

Among the problems the court found with the amendment:

• It wrongly defined labor unions as no-bid contractors, limiting their political contributions.

• It barred a contract holder doing business with one government agency — a county department, for example — from giving to any candidate anywhere in Colorado.

• It disproportionately punished contractors and their families by prohibiting political contributions for two years following a no-bid government contract.

Dissenting Justice Alex Martinez agreed with many of the problems outlined by the majority but argued that the amendment could, with a few key edits, be preserved with a smaller scope. Justices Allison Eid and Nathan Coates recused themselves.

The court also threw out provisions that would have required the state to compile a public database of no-bid government contract holders.

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